1981 (8) TMI 89

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....he assessee had not commenced business on the date on which the loan was given. 2. Before us, the ld. counsel on behalf of the assessee has contended that giving of loan itself was one of the objects of the company and that, therefore, the preliminary expenses must be allowed as a deduction. In this connection, he has drawn our attention to the objects clause of the assessee company. Paras B(2) and B(3) stated the objects as "to carry on activities of an investment, money lending" and Para B(3) "to invest the capital and other moneys of the company in deposits, current or fixed with any banks, shroffs, individuals.....to lend money with or without security." He has supported his arguments by referring to the following cases: (a) CIT v....

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.... the interest of the company to do so until the manufacturing business was started, thus separating the actual lending from the main objects. That being so, it cannot be said that the company had started business when lending money. 3. It is true that in the third case mentioned above (from conductors) it has been stated that the company can be said to have set up its business when one of the categories of the business is started and it is not necessary that all the categories of the business activities must start simultaneously or that the last stage must start before it can be said that the business was set up. In that case, the company had started securing orders before starting the manufacturing activity, but securing orders was one ....